According to Zoopla’s house price index, prices have shown “modest” quarter-on-quarter falls of up to 0.7 per cent across all regions and countries in the UK.
It continued that it expected low negative annual growth and for house price contraction to come to negative one per cent by the end of the year.
The report noted that there was some regional variation in annual house price trajectories, with plus 4.8 per cent recorded in Wales and negative 0.5 per cent in London.
The firm noted that around a quarter of homes available to buy in 2023 registered an asking price reduction, which is lower than earlier this year and evidence of a “soft landing for house prices”.
Buyer demand still elevated but supply returning
Zoopla said that buyer demand was 14 per cent higher than 2019, but around 42 per cent lower than this time last year.
The company said that buyer demand was higher last year due to a “chronic shortfall” of homes available on the market.
Zoopla said that the stock of homes for sales had expanded and was two-thirds higher than this time last year.
Due to higher supply, the number of new sales agreed is up six per cent on 2019 and 10 per cent ahead of the five-year average after Easter.
Zoopla said that regionally Scotland and the North East were seeing high levels of new sales agreed due to “more attractive affordability levels.
FTBs biggest buying group in 2022
Zoopla said that first-time buyers were still an important buyer group for the housing market, accounting for over a third of sales last year.
This made them the largest group of home buyers followed by existing owners buying with a mortgage at 31 per cent and cash buyers at 25 per cent.
Zoopla said that high rental costs and lower rental supply meant more first-time buyers may be considering home ownership, but the deposit remained a challenge.
It noted that first-time buyers needed an extra £7,350 of gross household income (amounting to £55,900 ) to buy a three-bed house. This compares to an extra £4,900 (an income of £51,000) needed for a two-bed home.
First-time buyers in London and the South East are also worse off, needing an extra £12,150 on their gross household income for a three-bed property. The greatest increase in the income needed to buy a two-bed home is £7,300 in the South-West and East of England.
Richard Donnell, executive director at Zoopla said: “Housing market conditions continue to improve as buyers return to the market and more sales are agreed. House prices are posting very modest falls and are expected to be just one per cent lower by the end of the year. The worst of the pricing adjustment appears to be behind us.
“We expect first-time buyers to have another strong year in 2023 having been the largest buyer group last year. They need more income to buy but are starting to look for smaller homes and get away from rapid growth in rents.”
